Jefferies might be on track for its worst pay day in five years

Jefferies’ Q2 results were released yesterday – and it's becoming clear what the bank called a “difficult compensation season” might look like.

As it turns out, it's not so bad – compared to last year. Q2's compensation is actually slightly up by some 5%, from an average of $103k per head to $108k per head, although that’s still the second lowest Q2 has been in the last five years.

Pay for the first half of 2023 was, however, down ever so slightly compared to 2022, from $243k to $240k. That might not seem great, but it shows at least what a bottom for pay looks like at a bank – pay in 2020 and 2021 were well over $300k, and even 2019 (the last “normal” year for the economy) it was still over $250k.

The fact that pay didn’t crater might bring a sigh of relief for Jefferies’ bankers. Revenues at the bank fell by 22% quarter-on-quarter and 23% half-on-half. More worryingly, (diluted) EPS was down by 89% and 65%, by quarter and half year respectively.

Revenues falling mostly came from a fall in advisory fees and capital markets revenue. Equity and debt underwriting were up by 18% and 12% respectively. Advisory was well down both compared to Q1 of this year – by 15% and 32% respectively. Markets revenues, from equities and fixed income trading, were down by 15% compared to last quarter.

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